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Economics Taxes How Can Tax Essay

d.). Presently the government manipulates the books around in order to compensate for any tax cuts that they give. In reality, the vital thing for the government to do is to discontinue spending money. While this is not always reasonable, it is essential to make sure that the people and corporations of the nation can flourish. Tax cuts, when put into practice for long-term consequences, will offer a momentous increase in the market (How Do Tax Cuts Help the Economy, n.d.).

Due to the model of fairness, cutting taxes is by no means an easy task. There are two distinct notions that are at play. These are horizontal equity and vertical equity. Horizontal equity is the scheme that all people should be taxed uniformly. An instance of horizontal equity is the sales tax, where the quantity paid is a proportion of the object being bought. The tax rate remains the same whether one spends one dollar or then thousand dollars. Taxes are a relative concept. A second notion is vertical equity, which is interpreted as the capability-to-pay standard. This means that...

A case of vertical equity is the federal individual income tax system. The income tax is a progressive tax since the fraction paid goes up as income goes up (Cloutier, 2011).
Cutting taxes, at least in theory, decreases government revenues, which produces a budget deficit. In order to oppose this deficit, the government could cut expenditures. On the other hand, critics of tax cuts would then dispute that the tax cut is aiding the rich at the expenditure of the poor. That being said, cutting taxes normally augments disposable income, which then can increase consumer spending, directly improving GNP. In the end if tax cuts do well in rising economic growth, the rich and poor may both benefit (Cloutier, 2011).

References

Cloutier, Richard. (2011). Do Tax Cuts Stimulate The Economy? Retrieved from http://www.investopedia.com/articles/07/tax_cuts.asp

How Do Tax Cuts Help The Economy? (n.d.). Retrieved from http://www.taxforuminfo.com/how-do-tax-cuts-help-the-economy/

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References

Cloutier, Richard. (2011). Do Tax Cuts Stimulate The Economy? Retrieved from http://www.investopedia.com/articles/07/tax_cuts.asp

How Do Tax Cuts Help The Economy? (n.d.). Retrieved from http://www.taxforuminfo.com/how-do-tax-cuts-help-the-economy/
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